A bank has decided to extend a $1 million loan to a commercial client. The bank has a listed prime rate of 7%. The bank has estimated that the marginal cost of raising funds is 4.75%, and their non-funds operating cost is 0.25%. The bank desires a profit margin of 2% on their loans. The bank wants a default risk premium on the loan of 1.5%. They have also estimated that the loan's term risk premium is .5%. What is the interest rate this bank will charge on this loan if they use the price leadership model?

	A.	None of the other responses are correct
	B.	9%
	C.	11%
	D.	7%
	E.	9.25%